DS Business Consulting Services
The Cayman Islands
The Cayman Islands is a self-governing British Overseas Territory—the largest by population in the western Caribbean Sea. The 264-square-kilometre (102-square-mile) territory comprises the three islands of Grand Cayman, Cayman Brac and Little Cayman, which are located to the south of Cuba and northeast of Honduras, between Jamaica and Mexico’s Yucatán Peninsula. The capital city is George Town on Grand Cayman, which is the most populous of the three islands.
The Cayman Islands is considered to be part of the geographic Western Caribbean Zone as well as the Greater Antilles. The territory is a major world offshore financial centre for international businesses and wealthy individuals, largely as a result of the state not charging taxes on any income earned or stored.
With a GDP per capita of $91,392, the Cayman Islands has the highest standard of living in the Caribbean.[9] Immigrants from over 130 countries and territories reside in the Cayman Islands.
The economy of the Cayman Islands is dominated by financial services and tourism, together accounting for 50-60% of Gross Domestic Product. The nation’s low tax rates have led to it being used as a tax haven for corporations; there are 100,000 companies registered in the Cayman Islands, more than the population itself.
The Cayman Islands holds a relatively low unemployment rate of about 4.24% as of 2015, lower than the value of 4.7% that was recorded in 2014. With an average income of US$71,549, Caymanians have the highest standard of living in the Caribbean. According to the CIA World Factbook, the Cayman Islands’ real GDP per capita is the 10th highest in the world, but the CIA’s data for Cayman dates to 2018 and is likely to be lower than present-day values. The territory prints its own currency, the Cayman Islands dollar (KYD), which is pegged to the US dollar US$1.227 to 1 KYD. However, in many retail stores throughout the islands, the KYD is typically traded at US$1.25.
The minimum wage (as of February 2021) is $6 KYD for standard positions, and $4.50 for workers in the service industry, where tips supplement income. This contributes to wealth disparity.
The government has established a Needs Assessment Unit to relieve poverty in the islands. Local charities, including Cayman’s Acts of Random Kindness (ARK) also provide assistance.
The government’s primary source of income is indirect taxation: there is no income tax, capital gains tax, or corporation tax. An import duty of 5% to 22% (automobiles 29.5% to 100%) is levied against goods imported into the islands. Few goods are exempt; notable exemptions include books, cameras, gold, and perfume.
No direct taxation is imposed on residents and Cayman Islands companies. The government receives the majority of its income from indirect taxation. Duty is levied against most imported goods, which is typically in the range of 22% to 25%. Some items are exempted, such as baby formula, books, cameras, electric vehicles and certain items are taxed at 5%. Duty on automobiles depends on their value. The duty can amount to 29.5% up to $20,000.00 KYD CIF (cost, insurance and freight) and up to 42% over $30,000.00 KYD CIF for expensive models. The government charges flat licensing fees on financial institutions that operate in the islands and there are work permit fees on foreign labour. A 13% government tax is placed on all tourist accommodations in addition to a US$37.50 airport departure tax which is built into the cost of an airline ticket. There is a 7.5% sales tax on the proceeds of the sale of the property, payable by the purchaser. There are no taxes on corporate profits, capital gains, or personal income. There are no estate or death inheritance taxes payable on Cayman Islands real estate or other assets held in the Cayman Islands.
The legend behind the lack of taxation comes from the Wreck of the Ten Sail, when multiple ships ran aground on the reef off the north coast of Grand Cayman. Local fishermen are said to have then sailed out to rescue the crew and salvage goods from the wrecks. It is said that out of gratitude, and due to their small size, King George III then issued the edict that the citizens of the country of the Cayman Islands would never pay tax. There is, however, no documented evidence for this story besides oral tradition.
Taken from Cayman Islands – Wikipedia